Losses on the Toronto Stock Exchange accelerated into the triple digits Friday afternoon as investors fretted about whether the U.S. and global economies are headed for another recession that could punish corporate earnings and sap consumer confidence.
The S&P/TSX Composite Index faded 179.24 points, or 1.5%, to end the day and week at 12,007.47
The Canadian dollar ducked back 0.12 cents to 101.16 cents U.S.
Stock markets have posted wild swings for nearly two weeks after a downgrade of the U.S. government’s credit rating and worsening fears about Euro-Zone debt problems.
The Toronto stock market took a beating Thursday, losing nearly 400 points, while Wall Street also lost hundreds of points in another day of volatility after relative calm earlier in the week. The selloff was sparked by a spate of bad economic news from the U.S. and around the world that raised fears another recession may be on its way.
Federal Finance Minister Jim Flaherty told a Parliamentary committee Friday that the current global economic turmoil will impact the Canadian economy, but so far his budget projections remain on track.
Flaherty was called to testify before the committee after two weeks of frenzied trading on stock markets. The committee was later to hear from Bank of Canada governor Mark Carney.
Traders will pay close attention to his remarks, which could impact movement in the Canadian dollar. But after a Statistics Canada report Friday showed inflation grew at a slower-than-expected pace in July, there is even less incentive for him to raise interest rates any time soon.
In Canadian corporate news, Caledonia Mining Corporation says it faces a dispute with the Zimbabwean government over the Toronto company’s Blanket gold mine in southern Africa. Shares fell 1.5 cents, or 16.7%, to 7.5 cents each.
Labrador Iron Mines Holdings Ltd. reported Friday a loss of $4.7 million, widened from a loss of $900,000 in the same period a year earlier on startup costs. Shares were down 69 cents, or 8%, to $7.96.
Afexa Life Sciences Inc. said its loss for the three months ended June 30 was $3.1 million or three cents per share, down from $4.1 million or four cents in the same prior-year period as revenue soared to $4.6 million from $1.8 million. Shares were up one cent at 58 cents.
On matters economic, Statistics Canada reported that the annual inflation rate dropped to 2.7% in July from 3.1% in June, in part because the introduction of higher sales taxes in three provinces is no longer included in calculations.
Although July marked the 10th straight month that overall inflation has been above the Bank of Canada's 2% target, the figure was well below the eight-year high of 3.7% recorded in May. Market analysts had forecast the July rate would be 2.8%.
ON BAYSTREET
The TSX Venture Exchange subtracted 5.79 points to 1,764.84, but the Nasdaq Canada index strengthened 3.70 points to 478.01
In Toronto, all but three of the 14 subgroups were lower on the day. Metals and mining stocks slid 3.4%, financials dropped 3%, while global base metals floundered 2.7%.
Gold again led the gainers, hiking 2.1%, while materials and information technology added 0.4%.
ON WALLSTREET
In New York, stocks retreated Friday, after trading mixed for most of the session, as investors fretted about news from Hewlett-Packard and continued to focus on Europe's debt crisis and the future of the U.S. economy.
The Dow Jones Industrials backtracked 172.93 points, or 1.6%, to 10,817.70
The S&P 500 was negative 17.12 points to 1,123.53, while the Nasdaq dipped 38.59 points below breakeven to 2,341.84.
The Dow is down roughly 3% for the week, while the S&P 500 is down 3.5% and the Nasdaq is down more than 5%.
The biggest drag on the blue chips was Hewlett-Packard, which was down 20%.
Hewlett-Packard disappointed investors Thursday after the company cut its full-year forecast, announced it was ending its tablet business and said it was looking to exit the consumer PC business as well.
Bank of America's stock dipped 1%, after the company announced it is cutting 3,500 jobs, in addition to the 2,500 jobs the bank eliminated earlier this year.
Gap shares were up 3% after the company reported better-than-expected results after Thursday's closing bell.
Friday's global selloff came a day after Morgan Stanley cut global growth forecasts, saying the United States and Europe are "dangerously close to a recession."
Adding to these concerns, Deutsche Bank downgraded its economic forecast for China, saying a slowdown or recession in the U.S. or European economies would be "the single most important shock to the Chinese economy," and could slow the nation's GDP growth to 7%.
In 2010, China's economy grew at a robust rate above 10%, and is forecast to grow more than 9% in 2011.
Meanwhile, JPMorgan Chase sliced its fourth-quarter U.S. GDP growth estimate to 1%, down from its previous projection of 2.5%. The bank also warned that the risks of a recession are "are clearly elevated."
The price on the benchmark 10-year U.S. Treasury nipped upward, lowering the yield to 2.07% from Thursday’s 2.08%. Prices and yields move in opposite directions.
Oil for September delivery regained 16 cents to $82.54 U.S. a barrel
Investors continued to seek shelter in traditional safe havens, including gold. The precious metal jumped as much as $59.40 on Friday, to bolt to a fresh intraday record of $1,881.40 U.S. an ounce, before pulling back to a settlement record $1,852.20 U.S.
